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Google could cut wages of US employees who work from home

Google may be planning to cut the pay of their US employees who permanently work from home. The technology giant has become renowned for its flexible work culture and wide range of employee perks. However, the company has recently announced it is cutting the salaries of remote workers by up to 25%, according to news agency Reuters.

Google employees who have longer commutes to work will receive the highest pay cut. As a result, some workers have chosen to avoid having their pay cut by making lengthy commutes of up to two hours. There are no indications as yet that Google intends to implement his change in the UK.

Getting employees back to the office

The Covid pandemic has shown that many employees across a variety of sectors can work from home effectively. However, several Silicon Valley firms are keen to get their employees back in the office and have been busy experimenting with different pay structures. Twitter, Facebook and Microsoft have already offered less pay to their employees who live in areas considered cheaper to live.

However, some smaller firms like Reddit have said they will continue to pay the same regardless of where their employees work to improve diversity.

Pay calculator

Google say that they have always based their compensation packages on location. It’s been standard for the company to pay the top of the market based on where an employee works from. Up until now, Google has paid their employees 100% of their wages.

But the company has now developed a Work Location Tool to show employees the impact of working remotely. The new pay calculator aims to help Google staff make more informed decisions about the city or state they work from and the impact on their pay if they decide to work remotely or relocate. It shows that workers living around an hour from the tech giant’s New York City office by train would receive up to a 15% cut in their pay if they work at home full-time. Meanwhile, an employee based in the same office and living in New York City would not get a pay cut if they worked at home.

Hybrid working option

Other US technology companies like Cisco have introduced hybrid working that doesn’t dictate how frequently employees must work in the office. The firm anticipates that less than a quarter of its staff will choose to work in the office for more than three days a week. However, some businesses like Goldman Sachs want their workforce back at their desks and consider working from home a temporary deviation rather than the new normal.

In the UK, employers cannot change aspects of employment contracts affecting pay rates without employee consent or terminating the contract and renegotiating them.

Further guidance

For more insight on hybrid working, check out our recent webinar, Flexible Working: the business case for introducing.

For further HR guidance and support, Contact Us.

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